Halldór Björnsson, William Connolley and Gavin Schmidt (traduit par Etienne Pesnelle)
A la fin de l’an dernier, le Trésor britannique a publié le rapport Stern sur les conséquences économiques du changement climatique, qui a été reçu avec enthousiasme par l’ensemble de la classe politique du Royaume-Uni, c’est à dire la gauche et la droite Depuis, il a fait l’objet de nombreux débats et critiques (voir la liste qu’a établie Rabbett Run). L’essentiel de la discussion a tourné autour des problèmes économiques (et éthiques) associés à “l’actualisation” (c’est-à-dire comment mesurer le bien-être futur à l’aune du bien-être actuel), ce dont traite notamment Nordhaus . Nous ne sommes pas qualifiés pour discuter de ces points, aussi ne les avons-nous pas commentés précédemment.
Toutefois, comme l’illustrent les interviews données lors d’une émission récente de Radio 4 (dont une avec notre William Connolley), certaines questions ont concerné la science qui sous-tend les calculs économiques. Nous allons essayer de les aborder.
Contrairement à un rapport plus ancien de la Chambre des Lords , Stern ne perd pas de temps à chicaner, et il va essentiellement chercher les éléments scientifiques dans le rapport du GIEC, avec parfois des mises à jour issues de récent travaux. La plupart de ces éléments semble avoir été rapidement récoltée en feuilletant le premier chapitre, et le lecteur un tant soit peu familier du rapport du GIEC trouvera peu de choses qui le surprendront dans des chapitres où on trouve des assertions comme “une masse écrasante de preuves scientifiques indique que le climat terrestre est en train de changer rapidement, essentiellement du fait de l’augmentation des gaz à effet de serre générés par les activités humaines”, etc. Cependant, les perspectives scientifiques de Stern sont pondérées de façon légèrement différentes de celles des rapports du GIEC puisque, déclare-t-il, “les décideurs doivent prendre en compte les risques de dangers extrêmes, en plus des prévisions moyennes, car les conséquences de tels risques, s’ils se matérialisaient, seraient très sérieuses” ( réponse de Stern à Byatt et al ).
Il y a trois composantes scientifiques dans le rapport Stern : la sensibilité climatique, les émissions futures de gaz à effet de serre et les impacts d’un changement donné, exprimé en anomalie de température globale pour raison de commodité.
La sensibilité climatique (déjà discutée ici précédemment) était donnée comme probablement dans la fourchette 1,5-4,5 °C par le Troisième Rapport d’Evaluation (TRE) du GIEC, et comprise dans la fourchette 2-5°C par les modèles utilisés dans le rapport Stern. Cependant, la probabilité d’atteindre des valeurs supérieures joue un rôle significatif dans le rapport. En particulier, Meinshausen* (2006) [établit] qu’il y a “entre 2% à 20% de probabilité que la sensibilité climatique est supérieure à 5°C” , mais dans le résumé du chapitre 1 ceci est condensé en “de nombreuses nouvelles études semblent indiquer qu’il y a jusqu’à 20% de probabilité que le réchauffement pourrait être supérieur à 5°C”. Cela est vrai, mais le rapport néglige de mentionner d’autres nouvelles études (Annan et Hargreaves ; Hegerl et al) qui semblent indiquer le caractère négligeable de la probabilité que la sensibilité climatique soit supérieure à 5°C.
L’incertitude sur le réchauffement futur ne se réduit pas à l’incertitude sur la sensibilité, mais dépend aussi de celle sur les niveaux futurs des gaz à effet de serre (GES). Il y a une grande batterie de scénarios et d’estimations des niveaux futurs des GES qui sont utilisés dans les rapports du GIEC. Le scénario utilisé par le Rapport Stern est le A2, mais, dans ce scénario, les niveaux de GES dans la seconde partie du 21ème siècle sont supérieurs à ceux du scénario A1, par exemple. La question ici n’est pas que le scénario A2 est moins solide que le A1, mais simplement que le Rapport Stern a choisi de travailler avec un des scénarios “à fortes émissions”. En plus, le rapport reconnaît aussi la grande incertitude (mais pas clairement quantifiable) des possibilités de rétroactions positives des émissions de CO2 d’origine naturelle et de méthane.
De même pour les impacts du changement climatique : la plupart des impacts sont déclarés possibles mais leur probabilité d’occurrence est matière à débat. Par exemple : l’affaiblissement de la circulation thermohaline en-dessous d’un degré de réchauffement, le risque d’effondrement pour 3 degrés, le risque de fonte irréversible de la calotte du Groenland pour un réchauffement de 2 degrés, l’élévation de 5 à 12 mètres du niveau des mers sur plusieurs siècles – ces éventualités sont matière à débat, et ne devraient certainement pas être considérées comme le “plus petit commun multiple” des impacts possibles.
En conclusion : Stern a largement bien utilisé la climatologie, bien qu’il se soit égaré parmi les fourchettes hautes des nombreuses estimations et qu’il les ait prises comme référence dans son résumé. Ce parti pris haut de gamme fait qu’on peut accuser son rapport d’ “alarmisme” : il ne souligne pas, alors que c’est juste, que les dommages et leurs coûts augmentent de façon non proportionnelle avec la température et que, compte tenu de cette asymétrie, les décideurs ont justement raison d’en prendre note. Toutefois, il semble que la critique majeure de cette oeuvre concernera (sur d’autres forums) sa partie économique.
NB. De façon plutôt prévisible, quelques-uns des « sceptiques » habituels ont également mis en cause la climatologie utilisée dans le rapport Stern. Cependant, une indication de leur manque fondamental de sérieux est que, lorsqu’il y a vraiment d’importantes incertitudes (ex : la probabilité que la sensibilité climatique est supérieure à celle généralement estimée), ils les ignorent pour continuer à faire les mêmes contestations répétitives et inintéressantes qu’ils ont toujours faites.
*Meinshausen, M. (2006): ‘What does a 2C target mean for greenhouse gas concentrations? A brief analysis based on multi-gas emission pathways and several climate sensitivity uncertainty estimates’ (“Que signifie une cible de +2°C en terme de concentration de gaz à effet de serre ? Une rapide analyse fondée sur les schémas d’émissions multi-gaz et plusieurs estimations de l’incertitude de la sensibilité climatique”), Avoiding dangerous climate change (Eviter un dangereux changement climatique), in H.J. Schellnhuber et al. (eds.), Cambridge: Cambridge University Press, pages.265 à 280.
Quick question: Can anyone give me an estimate of the likely increase in temperature if all new human produced greenhouse gas emissions stopped tomorrow, given as I understand it that there is a temperature build up in the sea (0.8 degrees C?) which is still to come out.
Stern Review preface asserts: “The scientific literature on the impacts of climate change is evolving rapidly, and the economic modelling has yet to reflect the full range of the new evidence.”
So the question is : does this review take into account “the full range of the new evidence” on the impacts of climate change? The answer is clearly: no. Stern Review gathered 2001-2006 publications (post TAR IPCC) in a very selective way, often choosing the most pessimistic or alarmist conclusions (on cyclone, permafrost thawing, sea level and many other fields where there is no consensus in the climate community and where everybody can easily check the large range of current observations / predictions in scientific literature).
Stern Review is an interesting study on the worst hypothesis of climate change, not on climate change itself. Maybe you should encourage your readers to peruse Lomborg publications, so they’ll get the “full range” of economic analysis (I personnally never read Lomborg, but I suppose we can objectively consider him as a skeptical / optimistic counterpart of Stern).
A (hopefully accurate) answer to the quick question from CBO’s primer on climate policy, available at http://www.cbo.gov/ftpdocs/41xx/doc4171/04-25-ClimateChange.pdf :
“Some researchers believe that if people immediately halted emissions of greenhouse gases, gradual warming of the oceans would ultimately contribute to an additional warming of the atmosphere of between 0.9ºF and 2.7ºF, or 0.5ºC and 1.5ºC (Mahlman, 2001, p.8).”
Cite: Mahlman, Jerry D. 2001. “The Long Time Scales of Human-Caused Climate Warming: Further Challenges for the Global Policy Process.” Paper prepared for the Pew Center on Global Climate Change Workshop on the Timing of Climate Change Policies. October. Available at http://www.pewclimate.org/docUploads/timing%5Fmahlman%2Epdf .
Thanks very much Bob, any recent thinking on how long it might take for the heat in the ocean to come out?
Further to 3: In the link Bob gave they comment: “recent studies have estimated that the average global temperature is likely to rise by between 0.5 degress F and 2.3 degrees F (0.3 degrees C and 1.3 degress C) during the next 30 years (Zwiers, 2002). Most of the warming during that period wil be due to emissions that have already occurred.” p. 15 CBO’s primer on climate policy (see reference in comment #2).
Is the mechanism for this rise from heat coming out of the sea, or from something else?
Thanks.
The mechanism is the GHGs. It is the thermal inertia of the climate (almost entirely in the oceans) that cause warming to lag GHG increases. It’s like putting a heat lamp over a fish tank – the water takes time to warm up.
Re #4 & 5 is there a rough consensus that we might see .3-1.3 degree C increases over the next 30 years and is this in addition to the (as I understand it) 0.8 degree C or so we have seen so far.
Over the next 30 years we’ll see about 0.5C warming. Some might say 0.6C is a better estimate. 0.3C is rather optimistic and 1.3C seems far-fetched to me. Plausible changes in emissions will have very little effect over the actual warming in that time frame but could affect the “committed response” of further decades.
Re # 7, thanks James. So, if I have it right, we have 0.8 degrees C already and we are definitely going something like 0.5 more which takes us to 1.2 degrees C above pre-industrial levels and, if I also have it right, a number of climate scientists are saying that what we are seeing from 0.8 C is stronger negative effects than the models predicted from 0.8 degrees C. And hence we can reasonably expect worse if we take it to 1.2 degrees C. Can someone tell me how it is safe to go to 1.2 C above pre-industrial levels?
The independent newspaper here in the UK has today printed a large scale article (front page) on the new IPCC report and what it is going to say about AGW bwtween now and 2100.
It is the usual diatribe of doom, the media really cannot seemingly sell a story without it.
http://news.independent.co.uk/environment/article2193672.ece
quite comical.
While economists discuss logarithmic utility functions and so forth it needs to be reduced to ‘gut feel’ to engage the public. What would help is more hard hitting but plausible climate change predictions within our lifetimes and that of the next generation. I’m talking about things like the number of expected days over 30C or expected rainfall in New York or London in the years 2020, 2030 and so on. The predictions would of course be revised due to human responses or natural changes. Critics of predictions that prove wrong should be invited to do better. Numbers like discounted future GDP are far too vague and impersonal to justify political action now. Also money based estimates introduce other complications such as fuel switching due to depletion.
It will be the public’s ‘gut feel’ from such predictions or unfolding weather woes that drive mitigation efforts, not discounted economic models. Otherwise that effort will continue to be inadequate.
I find these charges of “alarmism” by right-leaning pundits and “cherry picking” by conservatives like, Roger Pielke Jr., as little more than pejorative labelling.
http://tinyurl.com/w4c2u
If I were to go to a financial planner who was helping me with retirement, this person would quite obviously focus a little more on worst case scenarios versus planning for a rosier future. That’s the point of planning for the future — to highlight and potentially avoid possible disasters.
The best future scenarios need less discussion and less planning simply because the impacts will be less negative and detrimental. Nobody calls an elementary school fire drill an act of “alarmism” or “cherry picking” of potential outcomes. We know that a fire at a children’s school is highly unlikely (certainly less than 20%), but we plan anyway.
Re #9: I would like to know what negative effects from 0.8 C of warming have actually been observed, other than the controversy over Greenland ice cap melting rates. By that I mean long term changes in climate that can be attributed to warming, as opposed to weather events such as Hurricane Katrina or the (formerly) warm eastern North American winter. This may be a trick question, because we may not have sufficient time or strong enough data to tell. But if that is the case, it still invalidates the hypothesis of stronger negative effects than expected, or any real net negative effect at all so far. Yes, one can easily cherrypick areas where the climate has become worse, but how many other areas have seen some improvement?
While I am convinced that global warming is a serious problem and we should reduce greenhouse gas emissions, it must be understood as a long term problem. How is the public going to react when they find out that “Plausible changes in emissions will have very little effect over the actual warming in that time frame [30 years] but could affect the “committed response” of further decades.” I think spinning a story of near term doom is counterproductive to gaining the necessary support for the long term struggle we face to transform our economy away from fossil fuels.
Anent rosy, realistic, and alarmist predictions:
One ought to have an internal monitor regarding labels. We went to war, with the attendant cost of $600 billion dollar price tag (low) and the deaths of hundreds of thousands of people, on the “1% per cent doctrine”. We were certainly beguiled with “rosy” predictions on the ease and efficacy of the war. My understanding of the IPCC report pegs a rise in temps between 1.4C-4.5C at 95%. That leaves a ~2% for an increase larger than 4.5C. A 2% likelihood of an extraordinarily dire, global event.
A personally fastidious commenter would certainly acknowledge the recent uses of rhetoric to support actions far more local, costly, and debatable.
Perhaps the concept ‘global warming’ focuses attention on the easiest to quantify parameter, i.e., changes in global temperature (with the aid of satellites and computers). ‘Global climate change’ puts a more human feel to what’s coming because everyone knows what a favorable climate is and what might happen if it’s lost. Focusing on decimal degree C. changes in global temperature is the tantamount to focusing attention away from the coming climate changes that will cause floods, droughts, dust storms, high winds and other extreme weather events and the difficulty of predicting where, when, and which kinds of weather related problems people in the near future will be experiencing.
#13 If you have a political agenda, the message for public opinion is clear: the less we put CO2 in the atmosphere, the less we warm the surface, the lowest the probability of a dangereous climate change (for any linear or non-linear effect, and even if the initial probability is itself low).
But if you examine orders of magnitude, that’s not really good for public support. In a linear approx., imagine for CO2 that instead of 3 ppm / yr, humanity emits 1,5 ppm / yr in the next 20 years. This 50% reduction would imply a huge effort, mainly for emerging nations like India, China or Brazil. On a climatic point of view, the gain of 15 ppm CO2 may appear as negligible. With an equilibrium climate sensitivity of 1,5-4,5 K for doubling (+280 ppm), something like 0,08-0,24 K (twice less in transient change, and nearly no immediate effect as James put it in #8), anew in a rough approximation.
Such short-term analysis is a basic argument for cost/benefice (and prudential) reasoning like: before any collective decision having a social or economic cost, it would be better to know if our best estimate of climate sensitivity is 1,5, 3 or 5 K. AR4 will suggest a best guess of 3,2 K, but it seems like a fluctuating value (3,5 K in AR3, 3,8 K in AR2) and all GCMs are equiprobable, after all.
(My own opinion is that “dangerous addiction to oil” will be far more convincing in the next years and decades that “dangerous interference with climate” for accelerating transition toward a post-fossil world).
#8 IPCC AR4 should publish such decadal estimations from models, instead of the sole 2100 projection. Do you allude to them for the 0,3-1,3 K range on next 30 years or to your own works?
I haven’t read the Stern report, but it seems he’s on the right track. We can hope and pray for the best all we want, but we must try to avoid the worst. My only concern is that he’s an economist, and would therefore not really understand how much we can reduce our GHGs without lower productivity. That would be the purview of efficiency engineers, like Amory Lovins (www.natcap.org), who are able to point out to real life examples of what can be done with off-the-shelf tech to lower our GHGs here in the U.S. easily by 50%, even 75% or more. Not models, but actualities. People in other countries have no idea how well within the “production possibilities frontier” we are, that is, totally inefficient, getting very little bang for our buck (given current tech & structural possibilities).
And I can’t imagine any report that would capture the costs of GW over its lifetime. Glad Stern takes issue with discounting future generations — that’s our kids & grandkids, you know.
In #13 Blair Dowden wrote:
“Re #9: I would like to know what negative effects from 0.8 C of warming have actually been observed, other than the controversy over Greenland ice cap melting rates. By that I mean long term changes in climate that can be attributed to warming, as opposed to weather events such as Hurricane Katrina or the (formerly) warm eastern North American winter. This may be a trick question, because we may not have sufficient time or strong enough data to tell.”
There is actually quite a bit of observational evidence of negative consequences.
The issue on Greenland is not so much increased net melting, which doesn’t seem to have changed that much, but acceleration of oceanward flow of many of the southern Greenland glaciers, due perhaps to meltwater flowing through moulins down to base rock, which it lubricates.
The strong warming of the Antarctic Peninsula has led to the breakup of large ice shelves whose presence tended to impede the oceanward flow of mountain glaciers on the peninsula. Flow in these glaciers has accelerated, with eventual impact on sea level.
The post-little-ice-age melting of mountain glaciers all over the world has accelerated, with fairly predictable long-term impacts to peoples that depend on summer melt from those glaciers for much of their irrigation and other use water; think the Indian sub-continent.
There are numerous studies of phenology (study of the timing of periodic biological/ecological events) that demonstrate damage to specific species and ecosystems, because of changes in the timing of migration, reproduction, and arrival of prey species.
The strong warming in the Arctic and near-Arctic has had numerous negative consequences, including undermining the tradition lifestyles and economies of indigenous peoples, destruction of infrastructure from melting of permafrost, increased releases of CO2 and methane, also from the melting of permafrost (this last being a positive greenhouse gas feedback), and the several-decades decrease in the areal extent and thickness of Arctic sea ice, with demonstrable negative impacts on some of the polar bear populations.
There are some extended droughts around the world and demonstrated increases in the intensity of tropical and temperate-zone storms, but as Dowden suggests, it is probably too early to attribute these to AGW.
Best regards.
As this comes very close to my field of expertise – business strategy and general future research – I try to contribute. I am extremely worried about the economists current thinking that we should use the usual discounting methods of business investments when calculating the “profitability” of our actions on this climate change issue. Chief economist of Chrysler was the latest to raise this flag. I will give a very much simplified example to illustrate my point.
Question: If we could save the world from a 100% certain total destruction of the whole infrastructure in 2057 in a way that would cost 10% of it’s total value, would it be profitable to do the investment and save the world?
If we use a moderate 5% interest rate in our calculation, the answer is clearly no! We should not save the world infrastructure 0f 2057, it costs too much today. The present day discounted value of the world infrastucture in 2057 (when I am 100 years old and probably in my grave), is only 8.72% of it’s total value in 2057 and less than the calculated 10% (of the total value) required investment today. So we decide not to save the world infrastructure.
If the doom was about in 2107, using the same calculations, it would not be “profitable” to use even 1% of the total value of the future infrastructure to save it today. I hope you check my calculations, discounting is relatively easy and fundamental to profitability analysis the economists regularly use to give their expert opinions.
But clearly you must all see that this is perfectly absurd. I hope someone could be eloquent enough to explain to the general audience that the economists being loyal to their habitual methods of calculating profitability are perfectly willing to obey their calculations and get us 100% killed in fifty years or at least all our possessions destroyed as long as we are 10% more wealthy in the meantime.
Naturally there is a remote possibility that saving the world would become cheaper in the future when taking the discounting into account and we should put our money in the bank and invest it later into this world saving business, but clearly this is not the case now and it is not an assumption in these calculations. Using the discounting method when making this type of desicions is not based on the willingness to search for the cheapest alternative to save the world but instead to favour our present day spending over the wellfare of our children.
Re: 18, Risto Linturi
I’d suggest reading the appendix to part one of the Stern Review for a good discussion of the various ethical paradigms and assumptions that go into determining the social discount rate for analyzing policy decisions. You can find it here: http://www.hm-treasury.gov.uk/media/8A3/83/Chapter_2_A_-_Technical_Annex.pdf
In general, Stern argues that there is no ethical basis for discounting the welfare of future generations simply because they will be born later in time (e.g. no pure rate of time preference). Rather, he argues, the discount rate should be solely a function of the chance of the human race existing in the future, as well as the relative wealth of future generations. Because utility exhibits diminishing returns to increasing consumption, economic damages of climate change on a richer generation will have smaller negative effects on welfare than on a poorer generation. This is rather intuitive, as a richer world in the future would be better able to afford adaptation methods, and would not as easily be forced into absolute deprivation. A technical description of this phenomenon is the difference between future and present consumption multiplied by the marginal utility of consumption. Of course, calculations of discount rates become somewhat more complicated when you factor in population growth (or shrinking) and changing inequality levels both intra- and inter-nationally.
Stern’s choice of discount rate has been criticized severely in the Nordhaus article for being far too low and justifying enormous future sacrifices to smooth out large wrinkles far in the future. Ultimately, any use of discounting for long term policy decisions is problematic, and any discount rate assumptions should be made explicitly, as they tend to have more influence on the results than any other single variable.
Gavin: you may want to consider sticking in a link to the Stern Review’s response to critiques of their choice of discount rate functions:
http://www.hm-treasury.gov.uk/media/54B/BA/Technical_annex_to_the_postscript_P1-6.pdf
Well put indeed.
For those whose gravamen is immediate profitability, I recommend this:
http://www.wwnorton.com/college/history/ralph/workbook/ralprs36.htm
Assuming a 1C global average surface temperature increse, what would this equate to for 45 degrees N. Lat, and over land?
#16
Well the IPCC TAR explicitly predicted a “likely” range of 0.1-0.2C per decade (ie 0.3C-0.6C over 30 years), and I believe the consensus is somewhat towards the top end of that range, especially noting the assumption that there are no big volcanic eruptions in that time. The recent trend amounts to about 0.5C in 30 years and seems pretty steady. I expect AR4 will say something along these lines, but wouldn’t like to guess the exact choice of words…
The 0.3C-1.3C estimate (with 90% probability) appears to come from this paper. I don’t believe it (in particular the 5% chance of exceeding +1.3C), and frankly I doubt the authors do either. No surprise really (on either count) given that it was published in Nature :-)
Ritso
Thanks so much for your posting. Very illuminating, but perhaps not surprising. It might be helpful somewhere to post your actual calculations so that we can see, roughly, how these things are worked out, I don’t have a clue how discounting is supposed to work. I have no great opinion of economists – it is my theory, knowing economists’ unshakable faith in our ever expanding economy, their resolute conviction in our perpetual enrichment and their miraculous ability to plunder never ending resources from a finite planet , that the person who chopped down the last tree on Easter Island was indeed an economist. An economist is positively the last person in the world one should enquire from as how best to deal with global warming.
The social discount should not exceed the real economic growth rate on a per capital basis. Thus, if real economic growth equals 2% per year, and population growth equals 2% per year, then the social discount rate should be zero. It is critical that we value the future as if it mattered. Investment-rate based discounting is proper for evaluating investments for stockholders. But the vast majority of the world’s population are not stockholders and live off their incomes. If their real income (on a per capita basis) is less than that of investment returns (which is likely), and we apply investment-based discount rates, we will make decisions that assume they will have more real income in the future than they actually will have.
RE#23,
It does seem that many economic issues will depend on local effects, such as what kind of continental interior vs. coastline changes does that include, and what is the increase in general temperature swings? After all, if it suddenly gets 10C warmer in the summer and 10C colder in the winter, there is no change in the average temperature, but the effects on crops could be devastating. Of equal importance is what will happen as the ocean warms, and what kind of changes in ocean temperatures at the surface and at depth can be expected?
The 2001 IPCC had sections on regional climate change, http://www.grida.no/climate/ipcc_tar/wg2/index.htm , and that report stated “The main risk of climate change to some regions may be primarily from the potential for increased variability”.
A far as CO2 emissions and CO2 accumulation in the atmosphere, it seems that we are still on the high end of IPCC scenarios for CO2 emissions to the atmosphere. A good quote from the above link (CSIRO Australia) is this:
“Dr Raupach says that the amount of emitted carbon dioxide remaining in the atmosphere fluctuates from year to year due to natural factors such as El Niño. However, he says that on average, nearly half of all emissions from fossil fuel use and land-use changes remain in the atmosphere, with the rest being absorbed by the land and oceans. “When natural variability is smoothed out, 45 per cent of emissions have remained in the atmosphere each year over the past 50 years,” he says.”
“A danger is that the land and oceans might take up less carbon dioxide in the future than they have in the past, which would increase the rate of climate change caused by emissions..”
Given that CO2 emissions remain on the high end of the projected scenarios, it seems that making an economic estimate of the high end effects is reasonable and justified.
Roger Pielke Jr. is being asked to testify for the Republicans today, I’m guessing because Pielke always defends Bush against charges of politicizing science.
http://gristmill.grist.org/story/2007/1/30/24012/3177
How can anyone defend the way Republicans have gone after people like Michael Mann and Jim Hansen?
I guess what I’m trying to get at is that in a globally heating world we are not living in normal times, so “normal” (neoclassical) economics may not be entirely appropriate for thinking about what’s going on, and how best to deal with it, and what policies to follow.
I remember reading David Pearce’s (et al.) BLUEPRINT FOR A GREEN ECONOMY (15 years ago). He wrote something about how an old-growth forest could be chopped down to the last stand of trees (when it is well beyond the brink of ever recouperating), before the price would shoot up according to supply/demand principles. I can’t remember the economic argument behind that, but it made sense at the time I read it. And I applaud Stern’s report (I’ve just read the summary) for placing importance on life-sustaining resources beyond their exchange value.
If we are to continue with a free market, it needs to be made really free & fair. Externalities should be internalized under the business principle, “you break it, you buy it.” To the greatest extent possible all costs need to be incorporated into the product (perhaps over a 20 or 50 year period to allow for an easier transition). So the real cost of a gallon of gasoline would include compensation for all the harms it’s done to that point (in extraction, transport, processing, etc), and all harms it will do, including global heating harms, acid rain, and local pollution, including small particulate matter. The money then could be put in a fund and doled out to those harmed in some way, such as part of it going to lower medical costs. The real costs of wind should also be internalized (with some way of compensating for bird deaths — maybe funds for research into avoiding these — and depreciation of property for those who live in view of the wind generators).
I think in the competition among the wind, sun, and oil, oil will come in last (way far more expensive). Electric vehicles (powered by the sun/wind/hydro/hydrogenFC) will start looking very good.
BTW, for those interested in what each additional degree of heating may mean in terms of harms, Mark Lynas’s book SIX DEGREES is coming out in March, I think; it will let us know in easy-to-read fashion what each degree may likely entail (using the best science to date).
Committee hearings are streaming, online now (just after 10 am Eastern time)
http://oversight.house.gov/story.asp?ID=1162
Opening statement now:
“… we know that … senior Administration officials …. sought to edit an EPA report to, one, to “add balance” … secondly … delete a discussion of human health, … third strike any discussion of atmospheric levels of carbon because ‘carbon levels are not a good indicator of climate change’ …. by Philip Cooney …
“The White House has not provided these documents for the hearing as requested….
Re #28, Thom,
I am the first one to get frustrated trying to have a discussion with RPielkeJr and think many of his main arguments are seriously flawed, however, it you look at the testimony he is providing it is definately NOT a defense of GWB and if the Republicans invited him for that they will be disappointed.
What he will provide however is material for the recent chorus of “we are all to blame” that Republicans and Fox News are singing about just about every issue where they are ready to acknowledge that something has gone wrong.
Roger does this by comparing all the well know abuses of the Bush admin to a recent democrate prepared committe report that says:
which without the context is not even necessarily wrong, it depends if this is refering to impacts of GW in general, or already observed impacts.
RPJr must be read carefully.
Re: #19 and 20 and other comments about economics.
We are reminded in today’s New York Times that the present Administration in Washington would rather adhere to strict NeoCon economics. As noted:
“In an executive order published last week in the Federal Register, Mr. Bush said that each agency must have a regulatory policy office run by a political appointee, to supervise the development of rules and documents providing guidance to regulated industries. The White House will thus have a gatekeeper in each agency to analyze the costs and the benefits of new rules and to make sure the agencies carry out the president’s priorities.”
http://www.nytimes.com/2007/01/30/washington/30rules.html
Climate Change is but one of many problems that fall under the label of a “Tragedy of the Commons”, where the costs and benefits tend to be spread much differently around the Earth. With Climate Change, the costs are shifted from the present generation(s) to the future. Using traditional economic theory of discounting, the future impacts can be ignored today. Other ways must be adopted to structure the world’s economic activity to include these long term impacts, such as Sustainable Development, else the economic juggernaut will continue to roll onward toward some future crash into a new reality.
I think the question is, “why did the ‘republicans’ want Roger to testify?” And why when this was discovered, did Roger start going crazy on his blog?
Re #23: Mathew Rubin — It will depnd upon just where you are. According to a Hadley Centre report on regional climate change, in Milan, Italy it will be drier and hotter, while in Salem, Oregon, it will be even wetter in the winter but with a longer dry season in the summer…
Concerning Nordhaus’ review. I’m afraid I’m unfamiliar with who Nordhaus is, but his review reads as being a case of emotiveness and intransigence or skim-reading dressed up in academic-speak. He says:
“The large damages from global warming reflect large and speculative damages in the far-distant future;”
“[under the NICE model] The optimal rate of emissions reduction is 6 percent in 2005, 14 percent in 2050, and 25 percent in 2100.14 This optimized path leads to a projected global temperature increase from 2000 to 2100 of around 1.8 degrees C.”
– perhaps Realclimate can comment on this bit?
“We are in effect forced to make current decisions about highly uncertain events in the distant future even though these estimates are highly speculative and are almost sure to be refined over the coming decades.”
– but Stern does say he factored in uncertainty over the future, specifically as to whether other events will have clobbered civilization in the future.
“the Review’s near-zero social discount rate…puts present decisions on a hair-trigger in response to far-future contingencies. Under conventional discounting, contingencies many centuries ahead have a tiny weight in today’s decisions. Decisions focus on the near future. With the Review’s discounting procedure, by contrast, present decisions become extremely sensitive to uncertain events in the distant future.”
– see above remark.
“The Stern Review is a Prime Minister’s dream come true.”
– it was not the dream of the man who commissioned it, Gordon Brown, who huffed and puffed about it underlying the value of emissions trading, and promptly dropped Stern as an advisor.
The UK government subsequently announced it was proceeding with almost all its airport building plans which several environment watchdog committees and figures had previously condemned.
Risto, Martin Wolf (certainly an economist himself) of Financial Times made the same point methodological point: “I don’t believe that the standard discount rate approach is of great use when we are discussing a problem like climate change. In this case, we are trying to decide between different states of the world. Taking the wrong decision may leave our descendants in an entirely different world from today’s, with no capacity to reverse that process.
“I cannot think of any other decision quite like that. It is entirely different, I suggest, from deciding whether to build a railway or a road. These can be considered as isolated decisions, with finite time-horizons, against the next best alternatives. A set of decisions that may determine the habitability of the planet can’t be viewed in this way. This is simply not a marginal investment decision.” http://blogs.ft.com/wolfforum/2006/11/compelling_case.html#comments
And to John Monro, the economist then assumed a row boat to get off Eastern Island… Old joke, couldn’t resist.
RE #20, thank you Zeke – I do appreciate that proper discounting is complicated. And my comment was not against Stern and his calculations. I did not express that part clearly. There are many good reasons to use discounting. There is insecurity about the future. Perhaps we will invent rice that grows in salt water and in the far distant future we might manipulate our own DNA to grow gills. Perhaps we invent very efficient ways to extract CO2 from our atmosphere. Then there is this social discounting, we may prefer our own comfort more than our decendants even though all our heroes seem to prefer the lives of their decendants over their own and are even willing to die for their children. Social discounting might have a negative value. There is also possible greater efficiency of investments of tomorrow so that we should now put our money in the bank and gain the interest and then invest the larger sum later. But all these taken into consideration – risk tolerance, social discount rate and many other issues that these calculations require as parameters are basically value preferences, individual and cultural values. It seems too easy for the economists to show these as questions of right and wrong calculations or right and wrong parameters.
The examples should be clear and simple enough that a layman could express his value preferences even though he could not understand the calculations and possibilities and threaths of realistic situations. Stern did a lot in this direction. But this is not done by talking theoretically about the assumptions and complications of these issues as most people are not theoretical enough. This can only be done by showing simplified examples and storylines or scenarios where people can select their preferred choice in each optional scenario. If you give people enough many simple scenarios you will get a good picture of peoples real values and preferences and then we could base the calculations on these premises and only then we could talk about most probable optimal paths. We should not do the calculations based on the values of economists only. They are not experts on human values. Each person is his own expert on those issues.
#25 John, if you need to invest today 100 dollars to get a good luxurious 1000 dollars holiday weekend in 2057 which you compare your choices. You might buy the future weekend today with your 100 dollars or you might opt to buy it then for the 1000 dollars. Discounting is basically used to help compare these choices. Discount rate covers the risk of the future, we might not be alive, we might change our minds etc. But it also covers other things. It might be cheaper then or we might be able to put our money to a bank to grow and with only 5% interest we would get more than 1000 dollars in the year 2057. Discounting is basically when you calculate the interest rate backwards do get the value of today that would grow to the specified future value with that interest rate.
1000 dollars discounted to present day value with 5% interest rate you get by multiplying 1.05 to the 50th power and then dividing 1000 dollars with that number.
Re #19, Discount Rates
Risto, surely you have erred by assuming that the world economy has a fixed value. If the 5% discount rate correlates with a 5% growth rate then it would be impossible to spend 10% of the 2057 world economy now; you would just be destroy everything 50 years early. If the cost is only 10% of the current value, discounting would show that making that investment would be worthwhile.
I’m not saying discount rates are universally useful, but it they aren’t so completely nonsensical as the scenario suggested.
Re #38 Jacobin, I did not assume that the world infrastructure has a fixed value – it might increase, it might decrease. It depends on how much we spend and how much we invest in the next 50 years and how much gets destroyed in the meantime. I also did not wish to talk about the value of world economy to avoid relating it to value calculated through expected earnings etc. I wanted to have a simple and easy example that has no specific connection to our real situation. Just to make a point as a mental model and to ponder value priorities through thought experiments. I also did not refer with the 10% to todays value but 10% of the value of the infrastructure in 2057. If that infrastructure is 10 times larger than that of todays, then the whole proposition becomes impossible, but I still did not assume anything. As I try to explain in my comment #37, I do not consider discounting as completely nonsensical, but there are situations as Teemu in #36 points also out where using normal discounting methods is not proper. And on the individual level, we tend to avoid catastrophes by taking insurances – and clearly we expect to get only 80% return on the average. Perhaps the world now needs an insurance and it may well pay only 80% back. Most people who can afford insurances but cannot afford to lose all of their property, do think they behave rationally when paying for the insurance even though on the average it is not “profitable”.
One of the things that’s lacking in this discussion is a picture of where we are now and where we were ten years ago (for the US only, electrical energy generation, in thousands of megawatt-hours): from http://www.eia.doe.gov/fuelelectric.html
1995
Coal———–1,709,426
Petroleum———74,554
Natural Gas——-496,058
Nuclear———-673,402
Hydroelectri——310,833
Wood————-36,521
Waste————-20,405
Geothermal——–13,378
Solar—————-497
Wind—————3,164
2005
Coal———–2,013,179
Petroleum——–122,522
Natural Gas——-757,974
Nuclear———-781,986
Hydroelectri——269,587
Wood————-38,681
Waste————-23,199
Geothermal——–14,692
Solar—————-550
Wind————–17,811
So, while there has been some hopeful growth in wind, it is completely dwarfed by the massive expansion in coal-fired power plants – equivalent to doubling the entire hydroelectric generation of the US. Similarly, the expansion of natural gas and petroleum power plants is around 20 times greater then the expansion of wind power – and solar power is still a miniscule contribution to the total. Thus, net CO2 emissions continue to expand at a rapid rate – far beyond the 1990 levels. The expansion of nuclear power is due to renovations at existing plants, and is around 6 times greater then the wind/solar expansion.
So, for those who call for both solar, wind, geothermal and nuclear, the thing to do would be (at the very least) to invest in solar and wind and geothermal until they reach an equivalent power output to current nuclear supplies – which will require massive expansion.
The other obvious thing to do is to halt the construction of new fossil-fuel based power plants, and start shutting down coal-fired power plants as soon as possible.
This is just electricity generation, too – that’s not counting the some 7 billion barrels of petroleum that the US consumes for transportation fuel each year.
Recall that stabilizing global climate will require something like a 75% reduction in fossil fuel use, and soon, and you realize just what a massive long-term blunder the past decade will be seen as by future generations.
Bear in mind that Arctic is warming at twice the rate of the Earth.
Global Temperature Report: November 2006
University of Alabama in Huntsville
…The atmosphere has warmed by more than seven tenths of a degree Fahrenheit (0.71 degrees F) in the past 28 years, with the bulk of that warming in the Northern Hemisphere, according to data released today by Dr. John Christy, director of the Earth System Science Center at The University of Alabama in Huntsville (UAH).
The 28-year data from Dec. 1, 1978 through Nov. 30, 2006 also show Earth’s polar extremes are heading in opposite directions: The Arctic has warmed by an average of more than two and a quarter degrees Fahrenheit (+2.27 degrees F or +1.26 C) in less than 30 years, while the Antarctic region has cooled by an average of more than half a degree (-0.55 F or -0.31 C).
…The University of Alabama in Huntsville (UAH) and NOAA, Christy and Dr. Roy Spencer, a principal research scientist in the ESSC, use data gathered by microwave sounding units on NOAA satellites to get accurate temperature readings for almost all regions of the Earth.
[ Jim Dukelow reminded me a few notable caveates: the satellites provide no data at all above 80-85 N and S, and is unerliable for high altitudes and for snow/ice covered areas (Northern Greenland, Central Antarctica, and the Tibetan plateau). Even so, the current rate of sea ice melt in the arctic (~8.59% per decade) is alarming. ]
Re: #40 Ike,
Back before the first OPEC Oil Embargo of 1974, the U.S. electric consumption was growing at a rate of about 7% a year. Had that continued, the demand for electricity would have doubled in about 10 years. At that rate of growth, the entire U.S. electric generating system would have needed to be built again over only 10 years. Even a smaller rate of growth of 3.5% would have implied a doubling time of only 20 years. Much of that growth was the result of the adoption of air conditioning systems, which is likely to have become a standard in warmer climates of the U.S. However, heat pump systems are now becoming more common, which would also tend to drive a further increase in demand.
A few years back, the Southern Company reported that they were experiencing demand growth near 7% again. Thus, we are again seeing the same pressure to increase generating capacity. And, a large portion of this demand growth has been in coal burning systems.
It really boggles the mind to think of the demand growth which would be required to meet a shift from oil as a transportation fuel to electric cars. Yet, that appears to be one of the best approaches to cutting CO2 emissions. To be sure, some portion of that demand growth could be from wind and solar PV or solar thermal, but the Big Money Guys are more likely to push for more nuclear power plants. Back in 1975 or so, there were projections that within 25 years, there would be 1000 nuclear plants in the U.S. After Three Mile Island, new orders stopped and we peaked out at about 104 plants, as I recall. There are still many supporters of nuclear power that would love to build those other 900 plants. And that would only be the first installment towards a total nuclear economy.
RE#42,
Eric, one statistic that also is sobering is that in the US there are about 800 vehicles for every 1000 people, while in India there are about 8 vehicles for every 1000 people.
Perhaps the most definitive warning voice about the uncontrolled spread of nuclear energy was Ted Taylor; the book by John McPhee entitled “The Curve of Binding Energy” should be required reading for every nuclear enthusiast.
If we assume that a nuclear power plant is 1GW (guess) and there are a hundred of them… 100 GW of power – how many solar panels will be needed to match that? Assuming a plant can produce 25-50 MW of solar panels per year…we need a lot of solar cell manufacturing facilities, and a lot of wind turbines.
At some point, demand growth has to stop. This will probably mean the end of ‘modern economic theory’ as we know it today – at some point, economics has to come to terms with physical reality, and at some unknown point in the future, economics students will find themselves in the physical sciences rather than in the business schools – and the sooner the better.
Re #43
Couldn’t agree more. It is impossible to solve the energy (climate) problem if one accepts demand continuing to rise. In my view the problem is largely a psychological issue, not a technical one. Suppose we suddenly cut your energy allowance by 50%, would you still be able to manage? Of course! You would start car pooling, using public transport, do away your freezer, only use heating when absolutely necessary et cetera.
About nuclear: electricity is 16% of world energy use, and nuclear is supplying 16% of that, i.e. 3% of total energy demand. Now suppose we double world nuclear capacity (an enormous undertaking), we would get up to 6%, and save 6 – 3 = 3% CO2 (admittedly a non-trivial contribution). However we would use up uranium in 25 years instead of 50. However you look at it, nuclear (without breeder reactors) can only be a temporary solution. Arguments that demand does not have to be curbed and nuclear will save us are moonshine; energy saving must be our first priority.
The likelihood is that in the near future we will have to rethink our understanding of our family’s or household’s rules (oiko-nomia–economy) immediately, for the neighborhood, for the region , for the planet so that we can survive. Inertia between the ears makes it predictable that this natural process may be characterized as “dithering” while other natural processes bring us to near extinction. One stumbling block which may be removed easily to begin with is the thingification, reification of rules of the family, as in “growing the economy.”
Dick Veldkamp appears unaware that uranium ores were once much leaner, down to IIRC 0.01 percent, than the ~20 percent ores that are being mined today. More at http://tinyurl.com/aa99e .
In oil-equivalent terms, I get 1998 nuclear energy production working out as 9.96 million barrels per day; in 2005, 11.4 million barrels per day.
So in the eight years between and including those two, ~30 billion barrels’ worth.
What’s interesting, in light of that, is that the IAEA “Red Book” estimate of worldwide uranium resources available for US$1.3 a barrel or less increased from 330 billion to 470 billion barrels over approximately the same time.
Not all the uranium in the earth is worth extracting by current methods at current prices. If it were, the Red Book would say not 4,700,000 tonnes but maybe 35,000,000,000,000 tonnes; see http://arxiv.org/PS_cache/hep-ph/pdf/0501/0501111.pdf
If Veldkamp’s belief were true, uranium would be no threat to oil and gas. It is very much a threat to them; seven generations hence, such of them as we still are using will be manufactured at nuclear stations, unless of course something better than nuclear comes along in that time.
Re #46 How much uranium?
Thanks for the links. Your 4,700,000 does not seem unreasonable, as the World Energy Council (which seems an objective source in this matter) gives 3,281,000 tonnes (at less than $130/kg). See:
http://www.worldenergy.org/wec-geis/publications/reports/ser/uranium/uranium.asp
There seems to be agreement that current use is something like 70,000 tU/year, so with your figure I get 4,700,000/70,000 = 67 years, which would be significantly reduced if we really want to go for nuclear (this is in line with my earlier post).
I am not so sure about the price argument, one should also consider the energy required for extraction. At some concentration it will never be economic to mine lean ores, whatever the price.
Also with regard to Nordheus, he makes an interesting point that the Stern report is like making war against a country that may have nuclear capability in the distant future. You don’t pay trillions against global warming until necessity.
However he probably shouldn’t have made that point since this is the exact thing a certain American president is considering right now. How long before Iran becomes a dangerous nuclear power, don’t know, lets go invade. Interesting how something which seems like a ridiculous parallel is in fact not ridiculous at all. Hence the logic of great expence now seems not so far fetched with regard to climate change.
Can’t wait till all the IPCC reports are out, seeya
#43, Ike, I’m actually a physical sciences guy changing into an economic, politics guy. It isn’t the end of modern economic theory, economists don’t rely on continual growth to work their theories, they are just as happy to tell you how much your shrinking as how much your growing. The real basis of modern economics is the choices we make based on shrinking resource options, in this case the climate change starts to limit certain options such as burning coal. You’ll still need economists from a policy and business point of view regardless of the ‘climate’ of business. Also I hope the new physical scientists (’cause really we do need more:) aren’t going to be climatologists, we need people who can come up with alternate technologies and climatologists aren’t the ones to do it. The good news is economists will then be able to work out how valuable the thing is to society and accountants can do the taxes. Couldn’t help myself….
With all the talk of the supposed safety of nuclear power, I’m amazed no one has brought this up yet.
http://www.youtube.com/watch?v=C0K_LZDXp0I